Stocks extend losses for fourth week, wiping out Tk 173b in market cap

Stocks fell deeper into the red, extending the losing streak for a fourth straight week, as jittery investors continued their sell-off despite regulatory efforts to restore investor confidence.

The relentless bearish spell remains dominant, with investors finding no immediate solution to the prevailing dismal market outlook.

The securities regulator introduced several measures to boost investor confidence, particularly by relaxing negative equity provisions for market intermediaries and pledging to facilitate IPOs of well-performing and state-run companies.

As part of the measures to halt the erosion of stock prices, the regulator relaxed the investment limit of the Investment Corporation of Bangladesh (ICB) in a single 'A' category stock to enhance its capacity to invest more in good stocks.

Meanwhile, the Bangladesh Securities and Exchange Commission (BSEC) temporarily suspended 21 of its officials for misconduct and breaches of discipline during a protest against the commission's senior leadership in March.

But these initiatives failed to bring any positive result, as the market volatility persisted throughout the week and sellers maintained their dominance amid uncertainties over the market outlook.

Although favourable earnings disclosures from particular companies enticed some investors to shift their positions to those stocks, wary investors chose to stay on the sidelines, still reeling from the ongoing market downturn and mounting losses in their portfolios.

In a bid to cut further losses, jittery investors continued to dump their holdings in absence of any strong catalyst.

Consequently, the market closed in the red for three days out of four trading sessions this week while the market remained closed on Thursday due to May Day.

DSEX, the benchmark index of the Dhaka Stock Exchange (DSE), finally slid 55 points or 1.10 per cent this week to settle at 4,918, the lowest in more than six months.

The prime index lost 288 points in the past four straight weeks while the market-cap shed Tk 173 billion during the time under review.

Market analysts said the prolonged downturn prompted investors to shy away from taking positions in equities, while losses continued to mount on their portfolios as the distressed market lacked any major catalyst to revive investor confidence.

EBL Securities, in its weekly analysis, said despite the securities regulator's liquidity relief measures, particularly the relaxation of negative equity provisions for market intermediaries, the initiative failed to reverse the market's continuous downturn.

"The investors remained cautious, closely monitoring quarterly earnings disclosures from listed companies, and preferred shifting positions into stocks with favourable earnings calls for a potential quick return in the struggling market," said the stockbroker.

A leading broker, requesting not to be named, said the investors have been suffering from a severe confidence crisis for long while their confidence was dampened further by potential impact of abrupt gas price hikes and political tension.

The lingering macroeconomic challenges coupled with lower than expected corporate quarterly earnings of some of the major companies also hit investor sentiment, he said.

"Due to the continuous market decline, many margin accounts came under forced sale, which exacerbated the index plunge," he added.

However, he said, it is high time to invest in quality stocks as many well performing stocks came down to a lucrative price level after major corrections.

Price fall of selective stocks, such as Grameenphone, BAT Bangladesh, Power Grid, Square Pharma, Trust bank, National Bank and Prime Bank, dragged the prime index down as they jointly accounted for half of the key index fall this week.

Substantial price erosion of blue-chip stocks also dragged the DS30 index, a group of 30 prominent companies, down by 22 points to 1,823, while the DSES Index, which represents Shariah-based companies, shed 11 points to close at 1,094.

The total turnover on the prime bourse stood at Tk 14.10 billion this week, down from Tk 17.18 billion the previous week, as this week saw four trading days.

However, the average daily turnover increased to Tk 3.53 billion, 2.6 per cent up from the previous week's figure of Tk 3.44 billion.

Investors were mostly active in the banking sector, which accounted for 16 per cent of the week's total turnover, followed by the food sector (14 per cent) and power sector (11 per cent).

Major sectors posted negative performance. The telecom sector experienced the highest loss of 5.13 per cent, followed by non-bank financial institutions, food, banking and engineering sectors.

Of 394 issued traded, 199 declined and 158 advanced, with 37 others remaining unchanged on the DSE trading floor.

Square Pharma was the most-traded stock with shares worth Tk 1.15 billion changing hands, closely followed by Beach Hatchery, Midland Bank, Lovello Ice-cream, and BRAC Bank.

The port city bourse, Chittagong Stock Exchange, also ended lower, with the CSE All Share Price Index (CASPI) shedding 151 points to close at 13,805 while the Selective Categories Index (CSCX) fell 96 points to 8,428.

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